O2 offers deal to rent iPhone 4S

Paul Sakuma/AP

Consumers desperate to get their mitts on the latest iPhone 4S can now rent the handset for 12 months from O2.

The new 'leasing' scheme includes insurance as well as 740 minutes, 500MB of data and unlimited texts. But does it actually offer any value for money?

Mobile company O2 has become the first UK network to offer people the chance to rent the iPhone 4S on deals that run for just 12 months. There is no upfront fee and at the end of the term, customers simply hand it back and walk away, or upgrade to the latest model.

The deal is expected to appeal to those that like to have the last phones but are often prevented from upgrading to new models by restrictive lengthy contracts for 18 to 24 months. It is also expected to attract those that are unable to raise the big upfront fee required to get the latest phones on the shortest tariffs.

Cost of convenience
The flexibility of the new deal comes at a price though - £55 a month for the 16GB model or £65 for the 32GB, including insurance – which works out more expensive than similar O2 tariffs. The total annual cost comes in at £660 or £780 – which means consumers are paying quite a premium for a handset that they will never actually own.

The deal compares to typical two-year free-phone contracts at around £47-a-month (£564 a year for two years) – which despite tying customers in, provide complete ownership of the phone.

Leasing option
Sally Cowdry, marketing director for O2 UK, says potential customers can walk into one of its shops to do the deal, while existing users can phone and lease there and then. Small businesses will also be able to take advantage of the offer. You can expect to be credit-referenced.

Cowdry adds: "This is the first time a UK mobile operator has adopted a leasing model. We know that customers and small businesses are used to leasing everyday items from cars and washing machines to photocopiers and office space.

"They understand how it works and what the advantages of a leasing are. We have simply taken this idea and applied it to the smartphone market."

Of course the scheme comes with caveats and the O2 has warned that customers are required to take good care of the phone to avoid being charged for damage at the end of the contract.

If handsets are lost or badly damaged, customers will need to claim on the O2 insurance policy which is set up when leasing the phone. The insurance policy covers customers for theft, loss, accessories up to £200 and accidental damage, including water. But there is an £60 excess charge for the first claim and any subsequent claim costs £120.
Read Full Story